SB1391

THE SENATE	S.B. NO.	1391
THIRTY-FIRST LEGISLATURE, 2021
STATE OF HAWAII

A BILL FOR AN ACT

relating to procurement.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that a fundamental objective of the State's procurement practices and procedures is to control, and where possible, appropriately minimize costs to the State and counties, including both immediate and future costs. The procurement of goods, services, and construction by the State and counties can materially affect the ongoing "life-cycle" operating and maintenance costs of the State and counties.

The legislature further finds that although existing law encourages consideration of ongoing life-cycle costs for purposes of promoting energy efficiency, it does not require or effectively provide for full and effective accounting and consideration of life-cycle operation and maintenance costs in procurement practices and procedures. Full and effective accounting and consideration of life-cycle costs in the procurement of goods, services, and construction is critical to ensure economical management of the financial resources of the State and counties. The purpose of this Act is to require the procurement policy board to adopt specific procurement rules incorporating life-cycle operation as a requirement of state procurements by December 31, 2021.

SECTION 2. Section 103D-104, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Life-cycle costs" means the sum of the present value of investment costs, capital costs, installation costs, energy costs, operating costs, maintenance costs, and disposal costs, over the lifetime of the project, product, or measure."

SECTION 3. Section 103D-211, Hawaii Revised Statutes, is amended to read as follows:

"§103D-211 Procurement rules. (a) The procurement policy board shall adopt all rules necessary to carry out the purposes of this chapter and to implement its provisions in accordance with chapter 91. The policy board shall not delegate its power to adopt rules.

(b) No rule shall change any commitment, right, or obligation of the State or of a contractor under a contract in existence on the effective date of such rule.

(1) To ensure that the expected operation, maintenance, disposal, and any directly induced costs to the State and counties over the life of goods, services, and construction resulting from procurements in accordance with chapters 103 and 103D are:

(A) Fully and appropriately considered;

(B) Explicitly specified, addressed, or required in the purchase description and contractual terms and conditions applicable to procurements and in the requirements and criteria set forth in invitations for bids; and

(C) Explicitly quantified and considered in the evaluation of bids in the event, and to the extent, that bids materially differ with respect to operation, maintenance, disposal, and any directly induced costs;

(2) To provide standards and procedures for the effective consideration of expected operation, maintenance, disposal, and any directly induced costs, including:

(A) A determination of which types of procurements shall require analysis and identification of life-cycle costs used in bid evaluation;

(B) A specification of methods for determination of life cycle costs used in bid evaluation; and

(C) A specification of criteria and methods for appropriate weighting of life-cycle costs and bids in bid evaluation; and

(3) To ensure that modifications to contracts or specifications for procurements, including value engineering provisions in section 103D-411, do not result in net increases in total costs to the State or counties, including immediate or future operating, maintenance, disposal, or directly induced costs associated with the procured goods, services, or construction."

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________